Historically, people have preferred to stay loyal to their banks. Even amid high fees, inconvenience, and industry changes, the majority of consumers have stayed with their bank rather than finding a new institution. However, recent research seems to point towards a shift. A 2019 survey found that 45% of US and UK millennials hoped to switch banks within a year, aiming to get more resources from their financial institutions.
If you already have an account, it’s easy to get comfortable with what you have, especially if you haven’t had any major issues with your current bank. But it’s also important to remember that you aren’t married to your bank account. You and your bank don’t exchange vows promising a lifelong relationship. If you aren’t happy with your current bank, or are interested in exploring other options that could help with your personal finance goals, this could be a great time for a new account with a new bank.
Still not sure what to do, or if this is even the right time? Here’s our guide to when and how to switch banks.
When should I switch banks?
Ultimately, switching banks is a personal decision. There’s no universal “best” time to switch banks—it all depends on what you’re looking for and whether you think you’re getting it from your current bank.
Not sure if it’s time to switch banks? Think about your current bank and the service you’re getting. If you have any of the following thoughts, it could be a good idea to switch banks.
- You think you’re paying too many fees. Banks charge fees for many of their services, but fees aren’t constant across all banks. Look at the fees that you’re paying on a regular basis. If you find that you’re constantly paying fees for every single transaction, ATM withdrawal, or regular account maintenance, you could save money by switching to a bank that doesn’t have the same fees.
- It’s not convenient. At some point, you'll need to interact with your funds, and depending on the type of account, you may want to do it fairly frequently. If you have to travel far to visit a local branch, your bank doesn’t offer online or mobile banking services, customer service is limited, or transferring money is a chore, look for a bank that will allow you to do everything you want to do.
- You want to save more. If you currently have a savings account or other account that will build interest on your savings, check your bank’s interest rates and compare them with other institutions. You might be able to increase your savings elsewhere.
- You’re experiencing life changes. Major life changes will naturally have an impact on your finances. If you’re combining finances with your partner, you’re saving up to purchase a home, or you want to simplify and consolidate all of your accounts, it could be time to switch.
- You want more than your current bank or account offers. In addition to mobile banking and the other modern technological features mentioned above, you should consider other features. For example, some banks offer personalized guidance and tools for financial planning and management. Do some research on what other banks are offering, and consider whether you want them for your account.
- You’re worried about security. The main reason why people use banks is so they can be sure that their money will be kept safe. If your bank has had a recent breach, or you don’t feel your money is secure there, find a bank that you know you can trust.
How to switch banks, step by step
So, you’ve decided that switching banks is the right move. Here’s everything you’ll need to do.
- Figure out what you want. Do you want a different type of account? Or do you want the same account that you already have, but with a new provider that will give you more benefits than your current institution? If you just want to switch accounts, contact your bank to set up a new account. If you want to switch banks, keep reading.
- Know what you’re getting with your new bank. Is there a required minimum balance? How much are you initially required to deposit? What fees will you have to pay? How are the interest rates? How often will you be able to perform transactions? What features and benefits does this bank offer? Know the answers to all of these questions before you open a new account.
- Open an account at your new bank. Every bank is different, but this should be a short, simple process that you can take care of online or over the phone.
- Figure out which expenses are tied to your old account, and switch them over. Don’t close that old account just yet. Figure out which bills are being paid through your account, as well as any paychecks that are directly deposited into your account. Switch everything over to your new account, and give it a little time to be sure that everything switches over correctly.
- Close your account, but not right away. Transfer funds to your new bank, but leave a little bit in your old account. This will help you to avoid any minimum balance fees and will cover any automatic payments that haven’t switched over yet. Once you’re sure that you’re ready to close the account, withdraw any remaining funds (either by withdrawing cash or requesting a cashier’s check) and request that the bank close your account. You can do this online, over the phone, or in person. Be sure to request a written confirmation that the account has closed.
Once you’ve done all this, you should be good to proceed with your new bank. Keep an eye on your monthly statements to make sure that no automatic payments have slipped through the cracks. If that’s all taken care of, then enjoy your new bank and its services.